Ann: GENERAL: NZX: Equity Derivatives strengthen NZ's capital markets offering

• Release Date: 13/06/14 09:06
• Summary: GENERAL: NZX: Equity Derivatives strengthen NZ's capital markets offering
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					NZX
13/06/2014 09:06
GENERAL

REL: 0906 HRS NZX Limited

GENERAL: NZX: Equity Derivatives strengthen NZ's capital markets offering

NZX's Index Futures, set for launch on Monday 16 June, will further
strengthen New Zealand's capital markets infrastructure and provide investors
with additional tools for their New Zealand equity investment and risk
management needs.

The first equity derivatives contract to be launched will be the NZX 20 Index
Futures contract.  The NZX 20 Index is a capital index launched on 23 April
2012 off a base of 3,000, which has increased to 4,000 (as at 11 June 2014).
The NZX 20 is highly correlated with the NZX 50 benchmark index, providing
market participants with a simple and cost effective hedging tool similar to
that available in many offshore markets.

Equity derivatives will trade on NZX and be cleared by NZX's clearing house,
New Zealand Clearing Limited. The market is being supported by First NZ
Capital Securities Limited, an NZX Derivatives accredited Trading and
Advising Participant, and OM Financial, an NZX Derivatives accredited
Advising Participant. BNP Paribas Securities Services (the global custodian
and securities services provider of the BNP Paribas Group) is accredited as a
General Clearing Participant, a Legal Title Transfer Depository Participant,
and a Depository Participant for the market.

NZX CEO Tim Bennett commented: "Equity derivatives are another vital cog in
the wheel of New Zealand's capital markets and we are pleased to now be
launching these tools."

"The path to launch has required significant effort from our accredited
participants, New Zealand equity market participants and end users more
broadly, which we are grateful for. It demonstrates the commitment and
collaboration in the New Zealand market to work together to grow our capital
markets for the future."

As is normal with new derivatives markets, NZX expects that liquidity in the
market will build slowly at first.

NZX Head of Markets Aaron Jenkins commented: "Equity derivatives provide a
number of benefits to investors and help to build liquidity in the underlying
market which they are derived from."

"It's important to note though that as we have seen with dairy derivatives,
these markets take time to develop. In the first month of trading in dairy
futures, NZX saw just 25 contracts change hands, compared to this year, where
to date we have seen 27,000 contracts trade with NZX, which is now the
leading market for global dairy risk management tools."

Following the NZX 20 Index Futures launch, NZX will announce a launch date
for Individual Equity Options, which are another key tool in managing risk
and enhancing income in the underlying equity market.

The key benefits for investors in trading these instruments are:

o The ability to protect the value of a portfolio of stocks or individual
securities
o To create exposure to market movements without having to trade the asset
itself
o Efficiencies in transitioning between markets and asset classes
o Arbitraging or trading on price discrepancies between the underlying market
and the derivatives instrument
o Gaining market exposure and more efficient use of cash

Background:

o About Derivatives: https://nzx.com/Derivatives/learn_more

For further information please contact:
Kate McLaughlin
Corporate Communications
M: +64 27 533 4529
E: [email protected]
End CA:00251551 For:NZX    Type:GENERAL    Time:2014-06-13 09:06:45